Dear Insurance Company, You Have a Right to be Wrong

Before the lunch break in the Senate Finance Committee’s markup on health reform legislation, members engaged in a long and ultra-wonky debate on Medicare Advantage. The debate was essentially about whether more than $100 billion in cuts to Medicare Advantage will lead to a reduction in benefits. At the risk of being unclear, the answer is yes and no. Benefits seniors are entitled to under Medicare – i.e. much needed, pure medical benefits – will not change, but extra benefits (like dental, vision and gym memberships) provided by seniors who choose to buy Medicare Advantage plans will likely be reduced over time some some people. (The government has the power to do this because Medicare Advantage plans are subsidized with federal funds.) The debate ended with Democrats – and Republican Olympia Snowe – voting down an amendment from Republic Orin Hatch that the bill not make the cuts. See here and here for more.

But the debate after the senators returned from lunch was also heated – and indicative of how Chairman Max Baucus’s efforts at bipartisanship are, so far, not a part of the Finance Committee markup process.

On Tuesday, insurer Humana was ordered to stop sending notices to Medicare Advantage enrollees telling them that their benefits would be cut under Democratic health reform legislation. From the Washington Post’s David S. Hilzenrath:

The government might take enforcement action against insurers that have tried to mobilize opposition to the legislation by sending their enrollees “misleading and confusing” messages, a senior official of the Department of Health and Human Services said in a memo Monday.

The mailings in question urge enrollees to contact their congressional representatives and protest the legislation, the memo said.

A spokesman for America’s Health Insurance Plans, the industry’s main lobbying group, issued a statement Tuesday criticizing what he described as the government’s “gag order.”

“Seniors have a right to know how the current reform proposals will affect the coverage they currently like and rely on,” AHIP spokesman Robert Zirkelbach said.

Sen. Mitch McConnell of Kentucky, the Senate’s Republican leader, denounced the HHS order as an attempt to squelch free speech.

“We cannot allow government officials to target individuals or companies because they do not like what they have to say,” McConnell said.”

In the Finance Committee Wednesday, Republican Jon Kyl proposed an amendment that would have allowed actions like Humana’s to take place. Kyl said he was protecting the First Amendment rights of insurers to express their views, going so far as to say such expressions should be protected even if they’re not true. “Entities have the right to be wrong when expressing their free speech,” he said, calling the HHS action “chilling.”

Baucus countered that communications between insurers and seniors are not like other speech and that federal laws, including HIPAA, restrict communications between enrollees and insurers. “There is a long history of companies and individuals taking advantages of seniors,” he said, calling the senior population “vulnerable.” “This allows companies to take advantage of relationship they have with seniors and misrepresent the truth.” A Finance Committee staffer also pointed out that insurers who sell Medicare Advantage plans are government contractors and, as such, as even more restricted on what communications they can send to seniors and that Human violated their contract by sending the mailing.

A senior Democratic aide, e-mailing during the hearing said, “This is about doing what’s right for seniors, not about politics.” But it’s impossible to ignore the politics here.

The Humana mailing opposed Democratic reforms. A Democratic-controlled HHS ordered the mailing to stop. Republicans said the move was a violation of free speech. Democrats said Humana was taking advantage of seniors. The vote on Kyl’s amendment was split directly along party lines.

At the end of the day, while seniors certainly have a right to know what reform bills will mean for them, insurance companies – with a huge financial stake in the outcome – are not the sources that older Americans should be relying on for clarity, regardless of the First Amendment.